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Center for Global Development

Why it matters who runs the IMF and the World Bank*

By Nancy Birdsall
Contact: NBirdsall@cgdev.org
President, Center for Global Development


Working paper number 22
January 2003, updated October 2003

Posted with permission of Nancy Birdsall, of the Center for Global Development
Users might wish to access the CGD website at: www.cgdev.org
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Abstract

Increasing integration has made the great challenge of reducing poverty and advancing human development more achievable than ever, and more dependent than ever on good global economic governance. In this paper I set out the economic logic for why good global economic governance matters for reducing poverty and inequality in the world, and then develop several arguments for how better representation of developing countries in the IMF, the World Bank, and other multilateral institutions would make those institutions more effective in that task. The arguments include the long-run viability of new financing of the institutions, and their effectiveness in managing the political economy challenges of using conditionality. To illustrate the possible link between better representation and effectiveness, I discuss the example of the Inter-American Development Bank, where the developing country borrowers control 50 percent of the votes and the Presidency. I close with a discussion of the dilemma of reconciling the need for sustaining the financial and political support of the rich country members of these global institutions, with stronger poor country representation to ensure their long-run legitimacy and effectiveness.


Footnote:

* Previously titled, “Global Economic Governance and Representation of Developing Countries: Some Issues and the IDB Example”

This paper is based on remarks originally presented at the Commonwealth Secretariat Conference in London on July 3, 2002, and revised for a conference on reform of the International Monetary Fund and the World Bank at Yale University in April 2003. This paper is forthcoming the World Bank/Yale conference proceedings. I am grateful to Euric Bobb for his help in clarifying issues regarding the Inter- American Development Bank, and to James Adams, Ariel Buira, William Cline, Kemal Dervis, T.N. Srinivasan, Sandip Sukhtankar, Ngaire Woods and John Williamson for their comments on earlier versions.


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